From embarrassing YouTube search histories to outlandish conspiracy theories, Google knows a lot about people. Google trends can also throw some light on what investors are interested in, alongside the rising equity markets.

A recent note by Prashant Mittal, an equities strategist at Ambit Capital, calls for introspection of investor behaviour, as exemplified by a recent spike in search for terms like small-cap, mid-cap, and multi-baggers, on Google Trends.

An established trend among investors, herd mentality is buying furiously when markets rise, and selling in hoards when markets plummet, without any other reason.

The herd mentality is a matter of concern as in the past, the flocking of retail or individual investors during market booms has seen the end of bull runs.

This time around, it could spell danger for the stellar performance of the Indian equity markets over the past year and a half.

The recent jump in inflows of mutual funds to record levels, can be attributed to investors' fear of missing out during a boom. According to January 2018 data from the mutual fund industry body - Association of Mutual Funds in India (AMFI), the total assets under management of the industry grew at an annual 29% at over Rs 22.41 lakh crore, compared to Rs 17.37 lakh crore. Within this, equity linked saving schemes (ELSS), which are one of the tax saving options from retail investors, more than doubled to Rs 82,974 crore.

Mittal says that inflows in domestic mutual funds have been dominated by non-SIP (systematic investment plans) flows that tend to be speculative in nature. In a mid-December note, Mittal had highlighted that SIP as a percentage of total inflows in mutual funds lagged at 20%.

Small and mid-cap stocks have been the primary beneficiaries of such inflows, driven by the retail investors’ interest in sharp gains that such stocks can offer, Mittal says, adding, "However, retail investors have been known to time their entry in the markets incorrectly in the past.”

Their (retail investors') current interest in 'small-cap' and 'mid-cap' stocks and ‘multi-bagger’ returns, and the corresponding euphoria associated with it, can be gauged by analysing the outcomes for these three unique terms using Google trends.

"Google search for such terms in Jan’18 far exceeded (as a percentage of total search) similar search in peak valuations of 2007-08," says Mittal. Equity markets had peaked out over 2007 and first half of 2008, before the global financial meltdown took toll on the bull run then.

"With markets trading at (trailing) multiple in excess of 23 times, the criticality of (thus far elusive) earnings recovery cannot be overstated," Mittal adds.

Interest over time - Numbers represent search interest relative to the highest point on the chart for the given region and time. A value of 100 is the peak popularity for the term. A value of 50 means that the term is half as popular. A score of 0 means that there was not enough data for this term.

In the March 1 note, Mittal says that a sharp surge in domestic liquidity has been the prime reason for the Indian equity markets’ performance over the past 18-odd months. The markets witnessed foreign portfolio investors as net sellers in equity to the tune of nearly Rs 41,096 crore, between August 2016 and February 2018. In contrast, mutual funds were buyers in equities, to the extent of Rs 1.77 lakh crore. In the same 18-months, the S&P BSE Sensex, S&P BSE Midcap, and S&P BSE Smallcap have added over 6180, 3853, and 5806 points each in their closing values.

Clearly, while investors are optimistic and believe 'it's different this time,' it might be best to be cautious.